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OneCoin

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OneCoin

OneCoin is a Ponzi scheme promoted as a cryptocoin with a private blockchain. It is promoted by OneCoin Ltd, an offshore Dubai company, and OneLife Network Ltd (Belize), both led by Bulgarian Ruja Ignatova.[1]

OneCoin has been described as a Ponzi scheme, both because of how it has been set up and because of many of the people who are central to OneCoin having previously been involved in other such schemes.[2] In Hungary the Central Bank has issued a warning that OneCoin is a pyramid scheme.[3] And in China, several members and investors of OneCoin were arrested in 2016 and $30.8 million USD of assets were seized.[4]

In February 2017 German Federal Financial Services Supervisory Authority, BaFin, froze all the remaining active bank accounts that were used laundering money for OneCoin network. Total of 29 million euros remains frozen on these accounts. Also, BaFin ordered IMS International Marketing Services GmbH to cease all unauthorized money transactions related to OneCoin and to return the most recent money transactions to their investors.[5] 18 April 2017 BaFin ordered OneCoin Ltd to cease all the business in Germany.[6] 27 April BaFin banned trading in OneCoins. Also, OneLife Network Ltd and One Network Services Ltd were ordered to cease their business in Germany.[7] On 9 May 2017 Bielefeld public prosecution office started investigations against 7 people in power of International Marketing Services GmbH (IMS) in Greven, Germany, for organized fraud and money laundering. According to the prosecutors IMS had received 360 million Euros from German investors during the time period December 2015 to December 2016, of which 29 million were still in bank accounts that were frozen.[8][9]

On 23 April 2017, Indian police arrested 18 people in Navi Mumbai for organizing OneCoin recruitment event. The police attended the event undercover to judge the accusations before they decided to act. Further investigation has been started to reveal the higher levels of the the pyramid.[10][11] In May, the investigation recovered Rs 24.57 crores ($3.66 million USD) in nine bank accounts. A further Rs 75 crores ($11.16 million USD) was transferred out before authorities were able to seize it.[12] Beginning of May, two more people were arrested and Rs 24 crores ($3.57 million USD) were seized from bank accounts. A special investigation team was formed with four Assistant Police Inspectors and 15 personnel under Senior Police Inspector Shivaji Awate to follow the money trail for further arrests.[13]

In December 2016, The Italian Antitrust Authority (Autorità Garante della Concorrenza e del Mercato) "adopted an interim injunction against the company One Network Services Ltd., active in the promotion and dissemination of cryptocurrency OneCoin...", and its representatives in Italy, describing their activities as an "illegal pyramid sales system" ("sistema di vendita piramidale vietato dalla legge"), and ordering them to cease promoting and selling OneCoin in Italy [14] On 27 February 2017, after concluding their investigation, AGCM banned all activity on OneCoin until further notice.[15]

The British newspaper Mirror wrote that OneCoin / OneLife is a get-rich-quick scheme scam and a cult. Also Mirror has explained why OneCoin is worthless.[16] Bitcoin.com has given detailed evidence that OneCoin is an extensive ponzi scheme scam.[17]

The company and the scheme is on the observation lists of many authorities, among them are authorities in Bulgaria, Finland,[18][19][20] Sweden,[21] Norway[22] and Latvia.[23] Currently, none of the countries have declared OneCoin as criminal activity, but authorities have warned of potential risks involved in businesses like OneCoin. On 30 September 2015, Bulgaria's Financial Supervision Commission (FSC) issued a warning of potential risks in new cryptocurrencies, citing OneCoin as an example.[24] After the warning, OneCoin ceased all activity in Bulgaria and started to use banks in foreign countries to handle wire transfers from participants.[25] In March 2016, The Direct Selling Association in Norway warned against OneCoin, comparing it to a pyramid scheme.[1] In March 2017, the Croatian National Bank advised the public to be "very cautious" in decisions involving OneCoin, noting that it is not regulated in any way, and that possible losses will be fully borne by the investors.[26] 28 April 2017 Bank of Thailand issued a warning against OneCoin, telling it to be an illegal digital currency and it should not be used in trade.[27]

Concept

According to OneCoin, its main business is selling educational material for trading. Members are able to buy educational packages ranging from 100 euros to 118,000 euros.[18] Each package includes "tokens" which can be assigned to "mine" OneCoins. OneCoin is said to be mined by servers at two sites in Bulgaria and one site in Hong Kong. Each level (except six and seven), or package, gives new educational material, which is plagiarized from several sources.[28] The company and its recruiters claims that OneCoin doesn't sell cryptocurrency but only educational material. However, in a typical OneCoin recruiting meeting most of the time recruiters talk about investing in cryptocurrency and the educational material is barely even mentioned.[29]

Currently there is no way to exchange onecoins to any other currency. Previous to January 2017 the only way to exchange onecoins to any other currency was OneCoin Exchange, xcoinx, an internal market place for members who had invested more than just a starter package. This service was shutdown without warning in January 2017.[30] While it was functioning, onecoins could only be exchanged for euros, which were placed in a virtual wallet from which they could be requested for wire transfer. The market place had daily selling limits based on which packages the seller had invested in, which greatly limited the amount of onecoins which could be exchanged. On 1 March 2016, without a prior warning, OneCoin issued an internal notice that the market would be closed for two weeks for maintenance. The notice explained that the maintenance was necessary due to high amount of miners and for "better integration with blockchain".[31] On 15 March 2016, after the two-week maintenance, the market opened again but no visible changes had been done; most of the transactions expired as before and daily limits stayed on.

References

  1. ^ a b "Vil ikke være politi". direktesalgsforbundet.no. direktesalgsforbundet.no. Retrieved 25 March 2016. 
  2. ^ cointelepgraph.com (2015-05-27). "OneCoin exposed as global MLM Ponzi scheme". 
  3. ^ "Fokozott kockázatot hordoznak a világhálón elérhető virtuális fizetőeszközök (in Hungarian)". mnb.hu. Retrieved 2016-12-22. 
  4. ^ behindmlm.com (2016-04-27). "Chinese authorities investigating OneCoin, investors arrested". 
  5. ^ bafin.de (2017-04-10). "IMS International Marketing Services GmbH: account freezing and winding-down of unauthorised money remittance business". 
  6. ^ bafin.de (2017-04-18). "OneCoin Ltd, Dubai: Prohibition of involvement in unauthorised money remittance business". 
  7. ^ BaFin (2017-04-27). "OneCoin Ltd (Dubai), OneLife Network Ltd (Belize) und One Network Services Ltd (Sofia/Bulgaria): BaFin issues cease and desist orders holding the companies to stop own funds trading in "OneCoins" in Germany". 
  8. ^ Sueddeutsche (2017-05-10). "Krimi ums Kryptogeld". 
  9. ^ Heise (2017-05-10). "Betrugsermittlungen gegen Verantwortliche der International Marketing Services GmbH (IMS)". 
  10. ^ The Hindu (2017-04-25). "18 held for organising Ponzi scheme seminar". 
  11. ^ The Afternoon (2017-04-25). "Raid on OneCoin, brings out lakhs of coins". 
  12. ^ "OneCoin fraud: Cops recover Rs 24 crore from 9 banks". Times of India. 2017-05-13. Retrieved 2017-05-13. 
  13. ^ The Hindu (2017-05-18). "2 more held in OneCoin scam". 
  14. ^ "PS10550 - Vendite piramidali: sospesa in via cautelare la promozione della criptomoneta OneCoin". agcm.it. Retrieved 2016-12-30. 
  15. ^ "PS10550 - Vendite piramidali: Antitrust sospende la promozione della criptomoneta OneCoin da parte di One Life". agcm.it. Retrieved 2017-03-12. 
  16. ^ "Who wants to be a OneCoin millionaire? YOU don't - here's why hyped-up web currency is virtually worthless". 
  17. ^ "Buyer Beware! The Definitive OneCoin Ponzi Exposé". 
  18. ^ a b YLE (2016-03-14). "Finns investing millions in new virtual currency; police keeping tabs on case". 
  19. ^ Poliisi (2015-04-11). "KRP ON SELVITTÄNYT ONECOIN-VIRTUAALIRAHAA" (in Finnish). 
  20. ^ Helsingin Sanomat (2015-11-04). "Krp ei aloita tutkintaa Onecoin-valuutasta – kehottaa silti erityiseen varovaisuuteen" (in Finnish). 
  21. ^ Lotteri Inspektionen (2016-01-27). "OneCoins verksamhet polisanmält för misstänkt brott mot lotterilagen" (in Swedish). 
  22. ^ direktesalgsforbundet.no (2016-03-03). "Vil ikke være politi" (in Norwegian). 
  23. ^ "FKTK brīdina par OneCoin sniegtajiem pakalpojumiem" (in Latvian). 2016-03-11. 
  24. ^ FSC (2015-09-30). "СЪОБЩЕНИЕ – OneCoin" (in Bulgarian). 
  25. ^ "OneCoin lose last bank account, unable to accept wires". behindmlm.com. Retrieved 2016-11-15. 
  26. ^ "HNB IZDAO OZBILJNO UPOZORENJE ZBOG KRIPTOVALUTE KOJA SE ŠIRI HRVATSKOM 'Pazite, budite na oprezu, rizik od gubitka novca je velik'". Jutarnji list (in Croatian). HINA. 2017-03-07. Retrieved 2017-03-07. 
  27. ^ Bangkok Post (2017-04-28). "BoT warns public about OneCoin currency". 
  28. ^ Petteri Järvinen (2015-05-29). "OneCoin-koulutusmateriaali kopioitu kirjoista" (in Finnish). 
  29. ^ "OneCoin valtaa Aasiaa" (in Finnish). 2016-03-01. 
  30. ^ "OneLife suspend OneCoin withdrawls, affiliates can't cash out". 15 Jan 2017. 
  31. ^ "OneCoin - Uusi pyramidihuijaus? KRP: Rikosta voidaan arvioida luotettavasti vasta myöhemmin". 2016-03-02. Retrieved 2016-03-24.